Amendment could boost housing funds, taxes

ACA-1, which passed the state Legislature this year and will be left up to voters to decide on next November’s ballot, is one of the many attempts to close a wide gap between the Bay Area’s state-mandated housing targets and the affordable housing projects that are actually approved and developed.

“I think ACA-1 just really allows for a more democratic process in making those local decisions and assessing those trade-offs. A 55% threshold is still a really high threshold. That’s more than any candidate needs to win to get elected to office,” said Justine Marcus, senior state and local policy director at Enterprise Community Partners, a national housing nonprofit.

The effort runs parallel to the Bay Area Housing Finance Authority’s aim to include a $10 billion to $20 billion general obligation bond on next year’s presidential ballot in November, which would be used to help the region fund more affordable housing projects. The bond would be paid back from property owners, who would contribute $10.62 for every $100,000 of assessed value, according to recent estimates from BAHFA.

But while there is a need for more below-market-rate housing, raising taxes and thereby the cost of living is not the way to go about it, said David Kline, spokesperson for the California Taxpayers Association.

“Local sales taxes are really a regressive tax, so it hits the lowest income people the hardest in terms of the percentage of their income it would take … and anytime you increase the tax on property, some people will have a tough time keeping their home or business in operation with the thousands of dollars of extra taxes added every year,” Kline said. “If you’re increasing taxes on everything that goes into building the house then you’re counteracting the benefit, and you’re adding to the problem instead of the solution at that point.”

The amendment wouldn’t implement new taxes, but the 55% threshold would lower the barrier for local jurisdictions, who often find it difficult to incentivize developers to build more affordable housing without offering commensurate financing or incentives.

“There are projects that maybe they have their permits, they have their entitlements, maybe they have some money, but they’re waiting on additional public financing to actually be able to break ground. And we have tens of thousands of units that are in that pre-development pipeline that are kind of like waving in the wind to be unlocked by new resources,” Marcus said.

But delayed projects and financing challenges could be better resolved by reforming the California Environmental Quality Act, said Pierluigi Oliverio, board member of the Silicon Valley Taxpayers Association and former member of the San Jose City Council. The 53-year-old legislation is meant to minimize environmental damage caused by new developments but has been a source of statewide controversy, with many claiming it’s more often used as an insidious tool to block new housing. By the time a project fulfills all CEQA requirements, which can be years, construction costs rise significantly, Oliviero said.

“Inevitably it always comes back to CEQA, whether it’s legitimate or frivolous. Anytime you change a policy that so many people make money off of, it’s hard to change,” Oliverio said.

But, whatever the potential impact, cities and counties are grappling with significantly higher housing targets in the next cycle of the Regional Housing Needs Assessment — a state mandate that determines the number of new homes an area should approve to accommodate residents of all income levels — and many jurisdictions are searching for as many ways as possible to boost affordable housing production. The amendment has been supported by a variety of Bay Area governmental entities, including the City/County Association of Governments of San Mateo County and the Association of Bay Area Governments.

alyse@smdailyjournal.com

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